Quarterly report pursuant to Section 13 or 15(d)

MARKETABLE SECURITIES

v3.5.0.2
MARKETABLE SECURITIES
6 Months Ended
Jul. 03, 2016
Investments, Debt and Equity Securities [Abstract]  
MARKETABLE SECURITIES
NOTE 6. MARKETABLE SECURITIES
A summary of marketable securities, all of which are classified as current, was as follows:
 
 
 
July 3, 2016
 
December 31, 2015
In millions
 
Cost
 
Gross unrealized
gains/(losses)
 
Estimated
fair value
 
Cost
 
Gross unrealized
gains/(losses)
 
Estimated
fair value
Available-for-sale
 
 

 
 

 
 

 
 

 
 

 
 

Level 2(1)
 
 
 
 
 
 
 
 
 
 
 
 
Bank debentures
 
$
116

 
$
(7
)
 
$
109

 
$

 
$

 
$

Debt mutual funds
 
114

 
(1
)
 
113

 
88

 

 
88

Equity mutual funds
 
11

 

 
11

 
11

 
(1
)
 
10

Government debt securities
 
2

 

 
2

 
2

 

 
2

Total marketable securities
 
$
243

 
$
(8
)
 
$
235

 
$
101

 
$
(1
)
 
$
100

____________________________________
(1) The fair value of Level 2 securities is estimated using actively quoted prices for similar instruments from brokers and observable inputs where available, including market transactions and third-party pricing services, or net asset values provided to investors. We do not currently have any Level 3 securities and there were no transfers between Level 2 or 3 during the first half of 2016 or for the year ended December 31, 2015.
A description of the valuation techniques and inputs used for our Level 2 fair value measures was as follows:
Bank debentures— These investments provide us with a contractual rate of return and generally range in maturity from three months to one year. The counter-parties to these investments are reputable financial institutions with investment grade credit ratings. Since these instruments are not tradable and must be settled directly by us with the respective financial institution, our fair value measure is the financial institutions’ month-end statement.
Debt mutual funds— The fair value measure for these investments is the daily net asset value published on a regulated governmental website. Daily quoted prices are available from the issuing brokerage and are used on a test basis to corroborate this Level 2 input.
Equity mutual funds— The fair value measure for these investments is the net asset value published by the issuing brokerage. Daily quoted prices are available from reputable third party pricing services and are used on a test basis to corroborate this Level 2 input measure.
Government debt securities-non-U.S.— The fair value measure for these securities are broker quotes received from reputable firms. These securities are infrequently traded on a national stock exchange and these values are used on a test basis to corroborate our Level 2 input measure.
The proceeds from sales and maturities of marketable securities and gross realized gains and losses from the sale of available-for-sale securities were as follows:
 
 
Three months ended
 
Six months ended
In millions
 
July 3,
2016
 
June 28,
2015
 
July 3,
2016
 
June 28,
2015
Proceeds from sales and maturities of marketable securities
 
$
202

 
$
84

 
$
237

 
$
155

Gross realized gains from the sale of marketable securities(1)
 

 

 

 
1


____________________________________
(1) Gross realized losses from the sale of available-for-sale securities were immaterial.
At July 3, 2016, the fair value of available-for-sale investments in debt securities that utilize a Level 2 fair value measure is shown by contractual maturity below:
 
Contractual Maturity
 
(in millions)
1 year or less
 
$
223

1 - 5 years
 

5 - 10 years
 
1

Total
 
$
224